Why Canada should promote unionization
In his excellent article published in your Feb. 12 edition, Thomas Walkom gets all of the elements of a bad and worsening situation right but does not quite pursue the implications of his analysis far enough.
Like many economic commentators he reports that “income inequality” is a major long term problem both morally and practically. He correctly notes that “economies prosper when the broad middle classes make enough money to buy the goods and services produced. They sputter when those conditions are not met.”
He also notes that the policy of central banks (including the Bank of Canada) “in the years” (it would be more correct to say “decades”) leading up to 2008 “focused overwhelmingly on inflation.” This policy had the effect of leading firms “to restrict their business activity and lay off workers” which would have the effect of depressing wages “and that in turn would curb price increases.” He also notes, as have many other writers that “structural forces … such as the decline of unions and the growth of precarious work … conspire to keep wages down.”
What Walkom fails to do is to point out forcefully that union decline and the expansion of precarious work are direct consequences of the rigid application of the inflation control emphasis of the central banks. Walkom connects all but the last dot. The progression goes something like this: interest rates up, unemployment up, wages depressed, union membership, bargaining power and political clout down, income, wealth and power flow to the top eventually overwhelming democratic institutions.
Many proposals to break this vicious cycle have been made but not the most obvious one, the elephant in our collective room. Government, in the name of all Canadians, needs to promote unionization and collective bargaining. Throughout the 20th century when unions and collective bargaining were strong, income and wealth distribution flattened out, became more equal. The opposite occurred when unions and collective bargaining declined. Walkom notes that the Ontario government recently made a very modest move in this direction by making it easier for workers in “four-hard-to-organize areas” to certify unions. But that move was, as Walkom notes, “very hesitant.” A much greater effort to encourage workers to unionize and engage in collective bargaining is needed for this strategy to work.
It will not be difficult to justify such a move. Canada is a member of the International Labour Organization and all member states of that organization have a treaty duty to promote collective bargaining. With respect to the right to organize and bargain collectively, the ILO’s constitution is considered to be a human rights document and the Supreme Court of Canada has declared that it will interpret the Charter of Rights and Freedoms to ensure that Canadians enjoy rights no less generous than those Canada has committed to by signing onto international human rights documents. In short, Canada has both a treaty and a constitutional duty to promote collective bargaining. Against rising inequality, promoting the expansion of unionization and collective bargaining is both the practical thing to do and the right thing to do.
For that strategy to be effective, it will also be necessary to ensure that the Bank of Canada cease its overwhelming emphasis on inflation control. That is an important objective, but so is full employment — a job for everyone who wants one and a route to a good job for anyone willing to put in the time and effort.
Back in the decades after the Second World War, when unions and working people in general made significant progress, full employment meant an unemployment rate due primarily to people entering the workforce and people changing jobs. We have not approached that state of affairs in over four decades, the decades in which income inequality got out of control. We are not likely to slow and then reverse income inequality until we once again agree to take full employment seriously.
The logic is simple. With full employment, labour organizations will be able to be more effective and with unions more effective income and wealth differentials will flatten. We can expect business to protest. But high unionization rates are perfectly compatible with excellent economic performance. The economies of the Scandinavian countries have been among the most competitive for several decades and throughout that part of the world, nearly everyone is covered by a collective agreement.